Apple iAd program to monetize iPhone apps with interactive media

Tied into iPhone OS 4, Apple's new iAd program will allow developer to include richly interactive ad experiences into their apps and earn a 60% cut of the advertising revenue.

Described as "a new form of mobile advertising designed by Apple to deliver the interaction and emotion currently lacking in the mobile space," iAd is conceived to be a way for users to explore rich content ads right within the app that is presenting it, and without being dumped into a web browser.

How mobile ads are different

"If you look at advertisements on a phone, it's not like on a desktop," Jobs explained. "On a desktop, its about search. On mobile, search hasn't happened. People aren't searching on their phones. People are spending their time in apps."

Jobs was alluding to the fact that Google makes nearly all of its revenues from paid search placement on the desktop, not the more familiar banner ads and AdSense links that are more visible on the web. In mobiles however, there's no real market for paid search because people aren't doing lots of searches. They're involved with apps, and so banner ads is all there is, at least for now.

"Developers [who create free apps] need to find a way to start making their money," Jobs said. "A lot of developers turn to advertising - and we think these current advertisements really suck."

During its presentation of the new ad network, chief executive Steve Jobs noted that when you click on existing iPhone mobile ads, it yanks you out of the application you're running and launches a web ad. This prevents people from clicking on ads more often.

In response, Apple has designed a means for providing interactive and video advertising content without ever leaving the app. Apple will sell and host the ads under a 40/60 split, with app developers getting the larger slice of the ad revenue.

HTML5 content (no Flash)

Jobs said ad content would all be rendered in standard HTML5, and could be developed using any tools the ad agency wanted to use. Ads have access to much of the same APIs as apps, including Location Services and some level of accelerometer access. Asked about the prospects of Flash and Java for iPhone 4, Jobs said, "uh, no."

Apple demonstrated an HTML5 ad for Toy Story 3. The ad allows user to view characters, videos, posters and downloads, play sound clips, and even play a self-contained game within the ad. The user can then leave the interactive ad and return to the app they were previously using.

A second ad example for Air Jordan shoes allows users to build custom shoes, view the history of the product, find a nearby store, and even build a custom dorm room, all within the interactive ad experience.

"We don't know much about this advertising thing." Jobs said during the question and answer period following the event. "We tried to buy a company called AdMob, and Google came in and snatched them because they didn't want us to have them. We bought a smaller but still great company called Quattro."

... "Developers [who create free apps] need to find a way to start making their money," Jobs said. ...

This quote is priceless.

Nothing says more about the intentional confusion created between "free" and "free with ads" as this does. I guess the idea that "free" apps might be actually, you know ... free is old fashioned nowadays?

As is the idea that someone might be making and distributing things for "free" that are actually intended simply as free items?

After seeing the Ad demos (granted made by apple just for this purpose) I have to say Apple is bringing Ads to a place that they don't feel like ads anymore, they are small Apps inside of Apps ... this could be very cool. Hey google you watching, oh wait of course you are .

Nothing says more about the intentional confusion created between "free" and "free with ads" as this does. I guess the idea that "free" apps might be actually, you know ... free is old fashioned nowadays?

As is the idea that someone might be making and distributing things for "free" that are actually intended simply as free items?

I thought of the same thing. I hope Apple provides a tag in the App Store that specifies whether an App is paid-by-ads or really free. I don't really like my kids using ad-supported apps-- I'd rather pay a few bucks or find a worse, free app. But sometimes I don't mind using them myself.

I thought of the same thing. I hope Apple provides a tag in the App Store that specifies whether an App is paid-by-ads or really free. I don't really like my kids using ad-supported apps-- I'd rather pay a few bucks or find a worse, free app. But sometimes I don't mind using them myself.

I dunno. Do websites declare themselves in Google searches as to their ad status? Do magazines have badges on their covers to let you know how many and what kind of ads, if any, you'll have to look at (or page past) to get at the "content"? Do the listings for movies clue me in as to whether the theater will be showing ads prior? It just doesn't seem like this idea is much of a common practice, anywhere, so I'm not sure why we should expect if for phone applications (although, don't get me wrong, I would welcome a heads up).

The only place where I could see some kind of notification being absolutely necessary would be if the developer is charging for an app and also including advertising, but my guess is such apps would simply be shunned.

They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.

In my opinion iAd is kiiiinda revolutionary.. There are two sides
On the one side this really is an awesome way to get devs to create and publish more and higher-quality "free" content - which is a good thing! Prices may go down a bit and free Apps won't disappear.
BUT on the other side I'm worried that an ad popping up every 3 Minutes (and Jobs was actually talking about an ad every 3 minutes!) will ruin the actual user experience, even if the ads are awesome!
Im curious how they will handle this.

Jobs said ad content would all be rendered in standard HTML5, and could be developed using any tools the ad agency wanted to use. Ads have access to much of the same APIs as apps, including Location Services and some level of accelerometer access. Asked about the prospects of Flash and Java for iPhone 4, Jobs said, "uh, no."

There had BETTER be a way we can deny access to personal data to these ads. I want to be able to opt OUT of sending ANYTHING back to the ad companies, even if it is Apple. This includes usage statistics. How and where and why I use an app is NOBODY'S business but mine.

There had BETTER be a way we can deny access to personal data to these ads. I want to be able to opt OUT of sending ANYTHING back to the ad companies, even if it is Apple. This includes usage statistics. How and where and why I use an app is NOBODY'S business but mine.

You are aware that every time you use the internet or do a Google search you're sending "usage statistics" whether you want to or not?

In fact, if you're really worried about this you might consider never using any Google software, because their entire business model is based on collecting and selling such stats.

They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.

I dunno. Do websites declare themselves in Google searches as to their ad status? Do magazines have badges on their covers to let you know how many and what kind of ads, if any, you'll have to look at (or page past) to get at the "content"? Do the listings for movies clue me in as to whether the theater will be showing ads prior? It just doesn't seem like this idea is much of a common practice, anywhere, so I'm not sure why we should expect if for phone applications (although, don't get me wrong, I would welcome a heads up).

The only place where I could see some kind of notification being absolutely necessary would be if the developer is charging for an app and also including advertising, but my guess is such apps would simply be shunned.

I know a lot of folks probably don't agree as it comes down to how in previous generations, advertisements were considered to be not something you want, whereas today, they are more popular than some shows, but ...

To play devil's advocate to your argument, I would say that the situation with web sites is not the same as no representation is being made there that the content is "free." When you buy an app in the ap store that labelled as "free" it's obviously not the same if it has ads. Whatever one's opinion on ads is and whether you believe it's fair to call such an app "free" or whatever, there is clearly a difference between "free" and "free with ads" so there is somewhat of a misrepresentation going on when they are presented as the same thing.

There is a difference between the two categories, irrespective of what you think "free" means. Both types of apps are free in the "you pay no money" sense, but only one is also free in the original meaning of being unencumbered or of being a gift to the user.

You "pay" for the "free with ads" apps by being forced to watch the ads. These apps are not given to you as a gift because of the altruistic intent of the creator of the app, they are loss leaders, hooks, and advertisements for other apps and services. The *intent* of the creators of these kinds of "free apps" couldn't be more diametrically opposed to the intent of the creators of the (real) "free" apps.

There had BETTER be a way we can deny access to personal data to these ads. I want to be able to opt OUT of sending ANYTHING back to the ad companies, even if it is Apple. This includes usage statistics. How and where and why I use an app is NOBODY'S business but mine.

Good luck with that... lots of existing AD services not run by Apple already know VOLUMES of information about it and unfortunately the quantity AND quality of the data is getting more and more accurate as these smaller ad agencies merge and/or get bought-out .

It really scary what one lone IP address ... ALL BY ITS LONESOME ... can say about the person and/or family behind it.

Like dang near everything else in life, the market will decide if in-app advertising will be a success. If the ads get obnoxious, nobody will use the product - regardless of the price. Developers will need to find that compromise that provides enough revenue to support the product but not so much that you drive away your potential buyers.

I personally think ads suck. I don't want them. Let vendors simply charge for what they think their product is worth. But I don't remember anybody consulting me.

And to satisfy my own curiosity, can somebody tell me how today's free apps are viable? Everybody states that ads are necessary to keep apps free. Except those ads don't exist today. So how are the vendors handling it? What is the free app business model?

Good luck with that... lots of existing AD services not run by Apple already know VOLUMES of information about it and unfortunately the quantity AND quality of the data is getting more and more accurate as these smaller ad agencies merge and/or get bought-out .

It really scary what one lone IP address ... ALL BY ITS LONESOME ... can say about the person and/or family behind it.

In my opinion iAd is kiiiinda revolutionary.. There are two sides
On the one side this really is an awesome way to get devs to create and publish more and higher-quality "free" content - which is a good thing! Prices may go down a bit and free Apps won't disappear.
BUT on the other side I'm worried that an ad popping up every 3 Minutes (and Jobs was actually talking about an ad every 3 minutes!) will ruin the actual user experience, even if the ads are awesome!
Im curious how they will handle this.

They showed a banner ad. How often do banner ads show up in free apps now? I'm sure it's variable, but I wouldn't be surprised if a lot were faster than every 3 minutes. I don't think that was a rule either, simply an example. You won't be getting a fullscreen ad once every three minutes, that's for sure since there wont be fullscreen ad unless you choose to view one.

I know a lot of folks probably don't agree as it comes down to how in previous generations, advertisements were considered to be not something you want, whereas today, they are more popular than some shows, but ...

To play devil's advocate to your argument, I would say that the situation with web sites is not the same as no representation is being made there that the content is "free." When you buy an app in the ap store that labelled as "free" it's obviously not the same if it has ads. Whatever one's opinion on ads is and whether you believe it's fair to call such an app "free" or whatever, there is clearly a difference between "free" and "free with ads" so there is somewhat of a misrepresentation going on when they are presented as the same thing.

There is a difference between the two categories, irrespective of what you think "free" means. Both types of apps are free in the "you pay no money" sense, but only one is also free in the original meaning of being unencumbered or of being a gift to the user.

You "pay" for the "free with ads" apps by being forced to watch the ads. These apps are not given to you as a gift because of the altruistic intent of the creator of the app, they are loss leaders, hooks, and advertisements for other apps and services. The *intent* of the creators of these kinds of "free apps" couldn't be more diametrically opposed to the intent of the creators of the (real) "free" apps.

OK. Interesting ideas about the existential status of "free", but can you point me to any other medium or market wherein this distinction obtains?

Mind you, I'm not adverse to an argument that apps on a mobile device are a "new thing" that we have yet to fully conceptualize re advertising and and the concept of "free", but it does seem like a kind of onerous burden to expect these apps to declare themselves in a way nothing ever has, immediately.

My guess is that this will be sorted by the market itself-- "free" apps with unreasonable ad baggage won't be well received, or people will opt for a paid version if they don't like it. After all, free is free at least at the point of transaction, so if it turns out to have ads you can always just delete it and move on, perhaps noting that that particular developer isn't someone that you want to do business with in the future.

They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.

After seeing the Ad demos (granted made by apple just for this purpose) I have to say Apple is bringing Ads to a place that they don't feel like ads anymore, they are small Apps inside of Apps ... this could be very cool. Hey google you watching, oh wait of course you are .

They don't feel like ads because Apple did them in their meticulous fashion. You think all those 3rd rate ad agencies will care about quality? There is no way they are going to push out "fabulous" ads. It's just another platform that will swipe away precious resources.

I would have liked to see Apple block ads entirely. If you want to release a free app, do so. If you want money, charge a buck for it. There is nothing worse than releasing a free app littered with ads. And now that behaviour seems sanctioned by Apple.

I do applaud them for trying to make ads sexy and fit into the iPhone ecosystem, but I think their efforts are misguided...

With all these ISPs crying fowl and Carriers screaming about data usage, flooding more ads seems counterproductive. Visit Engadget.com with AdBlock on and then off. Ads make up more than half the data downloaded, and don't forget that for those that don't JB, there are no ad blockers for the iPhone webkit. Now apply that model to most of the internet. Ads make money but they cost us all in increased fees, load times, annoyances, etc: http://www.szilveszter.ca/news/2010/...e-advertising/

I always wondered why the Flash supporters think they could get away with saying that HTML can't provide interactive ad content. It's the retort that is really clutching at straws. Of course HTML can do interactive ads it's always had that ability it's just Flash developers have too great an ego to admit that.

This ad thing proves that Flash is becoming less and less relevant which can only be a good thing for the Web.

I would have liked to see Apple block ads entirely. If you want to release a free app, do so. If you want money, charge a buck for it. There is nothing worse than releasing a free app littered with ads. And now that behaviour seems sanctioned by Apple.

I do applaud them for trying to make ads sexy and fit into the iPhone ecosystem, but I think their efforts are misguided...

Their efforts are not misguided, thousands of developers will now have another option besides Google to monetize on Apple's platform: Apple.

Nobody can release a platform that does not allow ads, you're asking for the desolation of your platform.

Nobody seems to figure out that iAds could be a good thing when it comes to reading the newspaper apps, that usually have 3rd rate ads and nonsense on them. They will now sport something that is easier on the eyes for the user, and probably more interesting.

I personally don't like ads, who does, but I don't also rule the world. So let's deal with it.

Overall, good showing for Apple.

All you people who are constantly disappointed that the iPhone doesn't breast feed your kids, get a life.

Nothing says more about the intentional confusion created between "free" and "free with ads" as this does. I guess the idea that "free" apps might be actually, you know ... free is old fashioned nowadays?

As is the idea that someone might be making and distributing things for "free" that are actually intended simply as free items?

I don't mind that so much as search results that say "Free Download" which is technically correct but then you read that the free download is the trial version of the app.

Version Tracker is notorious for this. Search for an app or app topic and you see "Freeware" which traditionally means the app is free but when you download the app it tells you that it is a trial. This is not freeware.

I always wondered why the Flash supporters think they could get away with saying that HTML can't provide interactive ad content. It's the retort that is really clutching at straws. Of course HTML can do interactive ads it's always had that ability it's just Flash developers have too great an ego to admit that.

This ad thing proves that Flash is becoming less and less relevant which can only be a good thing for the Web.

I only hope developers will come up with an app that will block ads from appearing, like ClickToFlash blocks Flash ads. I'm afraid Apple may not allow an ad-blocking app, though.

I always wondered why the Flash supporters think they could get away with saying that HTML can't provide interactive ad content. It's the retort that is really clutching at straws. Of course HTML can do interactive ads it's always had that ability it's just Flash developers have too great an ego to admit that.

This ad thing proves that Flash is becoming less and less relevant which can only be a good thing for the Web.

I like Steve's response about developer tools for iAds. It's HTML5 so devs can use whatever tools they want. Right, but there are no tools. That is one of the things that Flash developers depend on - authoring tools. Animations with the sophistication typically found in Flash are super difficult to achieve with HTML5. Near impossible for your average graphic designer.

"We tried to buy a company called AdMob, and Google came in and snatched them because they didn't want us to have them"

So it looks like Apple wanted to buy AdMob after all and they did not intentionally left the deal to Google like some have speculated. And it sounds like Steve is sending a not so subtle message to the FTC

I am looking forward to seeing the battle unfold in mobile ads. AdMob is in a dominant position today they might come to regret their decision not to partner up with Apple.

I like Steve's response about developer tools for iAds. It's HTML5 so devs can use whatever tools they want. Right, but there are no tools. That is one of the things that Flash developers depend on - authoring tools. Animations with the sophistication typically found in Flash are super difficult to achieve with HTML5. Near impossible for your average graphic designer.

I was wondering the same thing. Sometimes what is not said is equally as important.

OK. Interesting ideas about the existential status of "free", but can you point me to any other medium or market wherein this distinction obtains? ...

It's just the original meaning of "free" when used in a commercial context. "Free" means (or used to mean) "free of payment or encumbrance" as in it's free to the end user and free to use. It's implicit in the statement (or again perhaps just *used* to be), that there are no contracts, no liens, no hidden fees or obligations.

It's just plain old "free" in other words.

I am guessing that this definition of "free" perhaps no longer obtains. I'm not sure what we should call the actually, really , just plain old free stuff though, if "free" can now mean "advertising gimmick." There will have to be a new word made up. FreePlus? FreePrime? ReallyFree?

It'd be helpful if authors of books being displayed on iBook could include ads just like developers.

Hmmm interesting... Never really gave thought to AD supported books...

Quote:

As young Harry pondered the troubling events unfolding around him he reached for a cold can of Pepsi sitting on the table beside him. He could hardly believe how quickly all his worries seemed to drift away as the cold can of Pepsi was reaching his lips.

I dunno... doesn't sound right at all...

All jokes aside... it actually is an interesting possibility depending on the books content.

I like Steve's response about developer tools for iAds. It's HTML5 so devs can use whatever tools they want. Right, but there are no tools. That is one of the things that Flash developers depend on - authoring tools. Animations with the sophistication typically found in Flash are super difficult to achieve with HTML5. Near impossible for your average graphic designer.

It's not difficult at all. This whole "Difficult for designers" thing is crap. It doesn't take long to understand HTML at all and the code reuse for HTML5 and CSS is far less than Flash. All in all it's just "designers" being lazy.

iAd is great. I liked the presentation and the standards compliance. Being able to get back to the app after checking out the ad is also good.

My favorite is Jobs saying that search has not happened on mobile apple's approach to mobile ads could actually make them and the devopers money, lower app prices and drive more hardware sales. Win win win all around.

It's just the original meaning of "free" when used in a commercial context. "Free" means (or used to mean) "free of payment or encumbrance" as in it's free to the end user and free to use. It's implicit in the statement (or again perhaps just *used* to be), that there are no contracts, no liens, no hidden fees or obligations.

It's just plain old "free" in other words.

I am guessing that this definition of "free" perhaps no longer obtains. I'm not sure what we should call the actually, really , just plain old free stuff though, if "free" can now mean "advertising gimmick." There will have to be a new word made up. FreePlus? FreePrime? ReallyFree?

Well, I'm not against the idea of completely free, but the fact is that in a commercial context I don't think "free" has ever meant anything but some kind of advertising. Think about it: what possible motivation does a company have to give its wares away outside of advertising?

Now it's true that some offers get the PR on the front end, you know, like "free gift with every purchase", but there are plenty of long standing commercial "free" things (all kinds of swag with the company name on them, OTA television, local scene newspapers, logo bedecked clothing, etc.) and more recent things (most of the internet) that are in fact contingent on advertising that comes with the offer.

And I don't see that as violating the meaning of the word in this context, either. An ad might be irritating, but it's hardly an encumbrance or obligation, and typically you can just look away, skip or mute them. Hulu, for instance, is "free" by most people's lights, certainly compared to cable or paid download, but it does put up a number of non-skippable ads.

I would be amazed if companies started literally giving things away for free in the sense you mean-- without any attachment to their brand.

They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.

I don't understand at all the complaints here. All of the following only exist for free because they are supported by advertising

broadcast television (except PBS, which depends on viewer donations)
broadcast radio stations
all major web browsers (they make money from searches)
millions of web sites including social web sites, online newspapers and magazines, every search engine, even AppleInsider, etc, etc.

In addition there are other things that cost money but are still largely supported by advertiser revenue, such as cable tv channels, printed newspapers and magazines, satellite radio, etc. These things would be far more expensive without the advertising revenue.

Every time an ad is blocked or a commercial is skipped with tivo, the people providing that content are denied an opportunity to get paid for their hard work. Which hurts the future product from whatever service the ads are blocked on as it means less money to invest in a better product in the future.

Steve didn't say iAds were just for free apps, but rather for free and inexpensive apps. Quality apps take a lot of time and effort to develop, It's a good thing for users that there is a fairly easy way for developers to generate a revenue stream from their work without charging a high price for their app.

And, if anything, having an ad based revenue stream is going to be an ongoing motivation for a developer to improve their app. If you pay for an app, the developer doesn't make more money by getting you to use the app more. If it's ad supported, not only is it less expensive or free to acquire, but the more you use the app, the more the developer makes. That is a strong motivation to continue to make the app better so it'll get used more.